AM 10 Sep 26: Oil surges above $100 a barrel
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Why did oil prices break the $100‑a‑barrel barrier and what sparked the surge?
A listener production.
Oil surges above $100 a barrel. US stocks slide, dragging ASX futures lower, while global bond yields push higher. Hello, good morning. I'm James Gruber. It's Thursday, the 10th of September, and this is the morning edition of the ComSec Market Update. Well, in June and early July of this year, markets assumed the Iran war was effectively over and oil prices plummeted. Since that time, though, the conflict has dragged on. It's now started to escalate again and oil prices have catapulted higher, up over 40% since July 1. And overnight, oil breached the psychologically important $100 a barrel level again, after Iran and the US struck tankers in the biggest wave of attacks on shipping since the war began, threatening to worsen energy supplies from the Middle East.
The worries over oil prices and inflation lifted long-dated bond yields in the US and Europe to multi-year highs.
How are Aussie futures, commodities and currencies reacting to the oil spike?
That came despite the US government announcing increased intervention in the bond market to try to force yields lower. Let's take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is poised to open lower with index futures down 1.1% shortly after 6 a.m. Yesterday, the ASX 200 closed 0.1% lower at $8,911. its lowest level in six weeks. Losses in financials outweighed gains in miners, while caution over oil-driven inflation kept investors focused on the risk of tighter monetary policy. Today, the energy sector looks like it may be one of the few places to hide as oil prices continue their steep recent rise. On those commodity markets, oil prices breached $100 a barrel for the first time since late July after the tip-for-tatter tax from the US and Iran.
Brink road futures settled 3.3% higher at just above $101 a barrel. Base metal prices were higher. Copper futures climbed 1% to a record high. as tight supplies outside the US overshadowed concerns over the Middle East's impact on economic growth.
What’s the impact of the oil rally on global currency markets today?
Meanwhile, aluminium futures rose 0.8%. Gold futures climbed as the US dollar remained under pressure. The futures settled up 0.5% at US$4,461 an ounce. Meantime, iron ore futures slipped after China's August iron ore imports beat expectations. The futures settled down 0.6% at US$99.37 a tonne. Let's now take a look at currencies. They were mostly higher against the US dollar. The euro rose 0.1% to 1.1631 US dollars. The Japanese yen advanced 0.2% to 153.61 yen. And the Aussie dollar was flat at 72.17 US cents. Let's head to Wall Street now. The Dow Jones Index finished down 0.8%, the S&P 500 fell 0.5%, and the NASDAQ lost 0.6%.
Why did Wall Street indices fall and which sectors were most affected?
A closer look at the trading day there. U.S. share markets fell on Wednesday, their time, as oil prices soared above that $100 a barrel mark, while Apple dipped and Treasury yields rose ahead of crucial inflation data expected later in the week. The S&P 500 Energy Index rose 1.1%, while all other sector indexes fell. Apple dropped 0.3% as it held its first smartphone launch under new CEO John Ternus. Meta jumped 6.6% and stemmed the S&P 500's decline after the social media company rolled out a long-touted AI assistant that can autonomously send emails, sell a car, or make travel bookings on behalf of users. Alphabet declined more than 2% after the Google parent said it would invest at least $15 billion in AI infrastructure in Finland over the next two years, including a major deal for the supply of nuclear power.
The Semiconductor Index added 0.4%, with AMD up 3%. and Dow fell 0.6% after Bloomberg News reported the chemicals maker was considering exiting its $20 billion US partnership with Saudi Aramco. Meantime, U.S. government bond yields rose, with a benchmark 10-year yield reaching its highest level since 2023, after the U.S. Treasury tripled the initial size of its next buyback of long-dated government debt to $6 billion.
How are European markets and bond yields responding to the Middle‑East tension?
Investors were disappointed that it wasn't more. The U.S. 10-year Treasury yield gained four points to 4.84%, while the U.S. two-year Treasury yield added three points to 4.43%. To the European markets now, the continent-wide FTSE Euro First 300 index ended 1.4% lower and the UK FTSE 100 dipped 1.3%.
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Chapters
6 chapters
1
Why did oil prices break the $100‑a‑barrel barrier and what sparked the surge?
0:02–1:07
2
How are Aussie futures, commodities and currencies reacting to the oil spike?
1:07–2:25
3
What’s the impact of the oil rally on global currency markets today?
2:25–3:25
4
Why did Wall Street indices fall and which sectors were most affected?
3:25–5:02
5
How are European markets and bond yields responding to the Middle‑East tension?
5:02–6:26
6
What does the US bond market signal about upcoming Federal Reserve rate moves?
6:26–7:58